Corporations’ Use of Prison Labor

Author: Jareli Reynoso Gutierrez | UC Berkeley School of Law | J.D.  Candidate 2021 | Posted: November 24, 2020

Throughout the historic summer of 2020, during the COVID-19 pandemic and the public mournings of the senseless murder of Black folks, many corporations made public promises in support of social justice. Some corporations were “bolder” through statements in support of Black Lives Matter and defunding police. Months passed, but what are the changes corporations implemented that align with those statements? Donations to the NAACP and Black Lives Matter, halt in the development and implementation of discriminatory tools, networking with Black organizations, revisions to discriminatory policies, and a promise to recruit diverse applicants. While all these promises are great, there is another critical area corporations need to consider.

Corporations receive substantial benefits through actively participating in the subjugation of Black people, corporations you know and love. Whole Foods where you purchase fancy cheese, McDonald’s where you rush to buy breakfast, Starbucks where you feed your caffeine addiction, Verizon and AT&T who you switched over to for their excellent cell service, Fidelity Investments who you trust to assist you with your taxes every year, American Airlines where you fly for vacation, and many more. Prison labor has impacted you, and even you benefit from it.

The “New Jim Crow” or modern-day slavery, are two ways to describe the mass incarceration of people of color. The system disproportionately incarcerates Black people via intentionally-designed strategies. Black people are, therefore, incarcerated at rates five times more than white people, and for every three Black men, one will go to jail in their lifetime. These staggering statistics demonstrate the reality of the phrase the “New Jim Crow.” While it is clear that white supremacy benefits from the atrocities of such a system, other seemingly innocent characters also benefit. Corporations help make slaves of incarcerated people by repeating a dark colonialist history of kidnappings and forced labor.

But what’s so wrong with incarcerated people working to earn skills to assist them when they transition to freedom? The system forces incarcerated people to work; they make some cents per hour (if they even get paid at all). There are no sick days, but there are poor working conditions and questionable or no safety regulations. This makes the incarcerated workforce particularly easy to control. They can’t complain or quit, and if incarcerated people dare speak out against the harsh conditions, some prisons send them into isolation. The oppressive nature of prison labor is starkly reminiscent of slavery, regardless of its supposed abolishment in 1865 via the 13th Amendment. In Texas, incarcerated people pick cotton at no pay, free labor.

Apart from the meager wages corporations pay for prison labor, they also receive a tax credit of $2,400 per work-release inmate under the Work Opportunity Tax Credit for hiring a “risky target group.” Additionally, some states rely on prison labor so much that they openly advertise it. Advocacy groups estimate that the prison industrial complex is now a billion-dollar industry and is one of the most profitable and lucrative businesses in the USA. Because of this, many banks and private investors, primarily Wall Street giants, invest in this business of modern slavery. These corporations monetize forced labor and harsh conditions with the government’s direct assistance through $80 billion in tax dollars annually to maintain 2.3 million people incarcerated, all for profits.

The public, however, is increasingly asking for companies to create and uphold stricter ESG standards. Returning to the origin of this conversation, if investors are genuine in their support of the Black Lives Matter and social justice, they can take the following steps: (1) Halt all use of prison labor; (2) Divest from the prison industrial complex and all companies that support it, including those within their supply chains; (3) Become a leader in fair chance hiring which includes hiring formerly incarcerated individuals; and (4) Use their corporate social responsibility to reduce recidivism either through hiring practices, supporting charities, or other similar ways. 

Over 4,000 companies have benefited from prison labor. If companies authentically want to position themselves as ESG leaders, conversations regarding racial equity must acknowledge mass incarceration and the USA’s prison industrial complex.

[1]  Tatum Hunter, These Companies Took Action in Support of #BlackLivesMatter, BUILT IN (Aug. 19, 2020), https://builtin.com/diversity-inclusion/companies-that-support-black-lives-matter-social-justice. 

[2] Tanay Tatum-Edwards, Opinion: It’s time for investors to dump shares of companies that profit from mass incarceration and prison labor, MARKET WATCH (Jun. 30, 2020), https://www.marketwatch.com/story/its-time-for-investors-to-divest-from-companies-that-profit-from-mass-incarceration-and-cheap-us-prison-labor-2020-06-29. 

[3] Hunter, supra note 1.

[4]  Judy Ponio, “Calling Out Companies That Use Prison Labor”, GlobalTel, (October 15, 2019), https://blog.globaltel.com/companies-use-prison-labor/.

[5] Ponio, supra note 4.

[6] Tatum-Edwards, supra note 2.

[7] Ashish Prashar, American businesses are raking in billions from the prison-industrial complex. It’s time to get serious about dismantling this disgusting system, BUSINESS INSIDER (Sep. 14, 2020), https://www.businessinsider.com/prison-industrial-complex-end-business-help-mass-incarceration-2020-9. 

[8] Prashar, supra note 5.

[9] Prashar, supra note 5.

[10] Ricky Riley, 13 Mainstream Corporations Benefiting from the Prison Industrial Complex, ATLANTA BLACK STAR (Oct. 10, 2014), https://atlantablackstar.com/2014/10/10/12-mainstream-corporations-benefiting-from-the-prison-industrial-complex; 

[11] Riley, supra note 8.

[12] Prashar, supra note 5; Judy Ponio, Calling Out Companies That Use Prison Labor, GLOBALTEL (Oct. 25, 2019), https://blog.globaltel.com/companies-use-prison-labor/. 

[13] Judy Ponio, Calling Out Companies That Use Prison Labor, GLOBALTEL (Oct. 25, 2019), https://blog.globaltel.com/companies-use-prison-labor/. 

[14] Prashar, supra note 5.

[15] Riley, supra note 8.

[16] Ponio, supra note 4.

[17] Ponio, supra note 4; Judy Ponio, The Problems With Private Prison Systems in the USA, GLOBALTEL (Aug. 5, 2019), https://blog.globaltel.com/the-problems-with-private-prison-systems-in-the-usa/. 

[18] Ponio, supra note 14.

[19] Prashar, supra note 5.

[20] Tatum-Edwards, supra note 2.

[21] Tatum-Edwards, supra note 2.

[22] Tatum-Edwards, supra note 2.